Thinking of coin collecting as an investment?
With economic problems in Europe, posing the threat of a double dip recession here in the UK It is with some amazement that the world's finances have largely left numismatics and coin collecting unaffected. Collecting coins like other vehicles for making money is not immune to the world economic conditions at the time that surround it and the recession we were all under could have tipped the balance and affected the retail value of the coins we all buy. To put it another way, to sell a coin you need to have an available market that wants it and needs it. Over the last few years we have seen a steady rise in the demand for quality numismatic materiel. Buyers at auction houses have been prepared to pay a premium for high quality and harder to get pieces. I don't personally feel the coin market has reached its peak yet, but there it a concern that with other forms of investing showing a increasing lack of return. or increased level of risk i.e the stock market. More people may turn to collecting coins as an sensible alternative home for their nest eggs. This could have the adverse affect of creating an inflated "numismatic" bubble as more and more new "collectors" pile in. This scenario would not be a new occurrence and has happened before in the world of numismatic history.
History repeating?
For many years coin collecting was seen as an exclusive hobby, it is a pastime long associated with royalty. Coin collecting has enjoyed a rich and eventful past. Over the last half a of a century the coin market has seen values readjust themselves several times...
From the mid nineteen eighties to the mid nineties the UK coin market was in the doldrums. Gone was the confidence and buoyancy of earlier decades, A new breed of investor was increasingly entering the market place forcing up prices. Many true collectors were being driven out. By 1980 prices for some types and varieties of coin had peaked. The market was becoming top heavy and over loaded with high value stock, this was becoming increasingly difficult to sell.
Dealers were reluctant to purchase new stock with a dwindling demand. By 1991 a coin that had been valued at £2000 in 1980 for example, could now be purchased for under £500. Disaster if you needed to sell at that time! The numismatic market was in trouble. Since that time the numismatic market has seen a dramatic improvement.
Over the years the market has seen price improvements. In fact year on year for the last five years at least prices have steadily improved. How the future will pan out we will have to wait and see.
In 2010 good prices were consistently being achieved by sellers in auction houses the length and breath of Britain. This current rise in prices has not accelerated into the boom and bust like before, because there are still relatively few new collectors entering the market.
In 2011 the story continues...
Due to the volatility of the last quarter of a century of collecting, financial investors today often over look coin collecting as a form of investing. Numismatics is generally not considered as a new or emerging market to invest in by the general investing public. This is good news for coin collectors. but with worsening financial times ahead this may change in the future.
Numismatists know that like any form of regular saving the accumulative effect of coin collecting over the long term, can in fact be a lot less risky then many other forms of speculative investing. Coins fresh from the mint, taken out of circulation by collectors today, can dramatically increase their face value over the long term. This form of collecting would always be immune to market conditions as your original outlay has been zero. If they prove to become popular with future generations of collectors their value will increase still further.
Choosing coins to invest in
When forming a collection with investment in mind it is important to realise that the value of any individual coin depends on the following three criteria and its value will be affected by the following:
· The coins exact design, legend, mintmark (if any) mintage or date.
· The exact state of the preservation of the coin i.e. its condition.
· The demand for it in the market at any given time.
It is useful to view the longer-term picture of influences that can effect this unpredictable and thinly capitalised market.
The success of investing in coins can also depend on the following:
· Supply and demand
· Inflation or expected inflation
· International monetary conditions
Strive for the best
And finally, appreciating that an individual coins popularity is not fixed in history. A popular monarch or series of coins today may be out of vogue next year. We all collect coins in an ever changing market.
Coins that are worth considering are: rarities, quality, and unusual coins. Proof coins/sets are always popular with some collectors and thus always have a market.
The golden rule of coin collecting as a investment is to always strive to obtain the highest-grade example of the coin you are after, pay the most you can possibly afford. It is also wise periodically to review your collection and diversify if possible. This will indirectly have the affect of maximizing the overall appeal of your collection to prospective buyers in the future. The Special Selection page offers a selection of coins carefully chosen for this purpose.
Storing your collection
As coin collecting is a long term pursuit it is important to find a suitable home for your valuable collection. Coins are made of different types of metal and some metals can react adversely to their surroundings. Copper coins for example blacken over time this is a chemical reaction with the atmosphere. Have you noticed how coins stored in plastic envelopes become sticky and difficult to remove? this again is a reaction with the plastic material of the envelope. Silver coins can tarnish or a bloom may appear on the surface over time, in some cases this can become a attractive feature of the coin. The best home for a collection is in a custom made coin cabinet, these are usually constructed of wood which has been tested not to have any adverse reaction with most metals.
Never clean coins
Whatever condition your coins are in it is important to realise that attempting to clean a coin will usually result in a decrease in its value regardless of its original "dirty" condition. Getting out the metal polish will ensure that your collection becomes worthless. Collectors and dealers alike are only interested in a coin in its original untouched condition. Cleaning coins is a risky and skilled operation and normally should never be considered.
An entertaining pastime
One of the nice things I have found with coin collecting and I have been collecting off and on since my Uncle introduced me to the hobby when I was a youngster is it can be restarted at anytime, with the added bonus of usually increasing in value in your absence! A nice way to earn money with little effort!
Coin collecting and numismatics are both educational and entertaining, a past time both absorbing, and if undertaken wisely a good investment.
So why not start a collection today? Or perhaps add something new to your existing collection. Take a look at what’s on offer here at Petercoins Your local coin shop on the net!
Coin investing with stocks and shares on the A.I.M Market
There are currently only two coin shares listed on the London stock exchange The first and larger is Noble Investments. (Noble) 2005 saw the merger between one of the oldest coin dealers in London A. H. Baldwin & Sons and aim listed investment company Noble Investments, further proof that the numismatics market is not only healthy but thriving. The shares are listed on the Aim market. This exciting joining of forces has created a large organization of professional Numismatists, offering a complete range of coin collecting materials and services. This can only be good news for the British and European coin scene. The second and smaller stock is also a Aim listed stock Avarae Global Coins PLC (AVR) An Investment fund for rare coins. AVR was formed by a group of major hedge funds and high net worth Individuals. The company specialises in purchasing rare and high quality coins from around the world. Avarae is the UK’s only publicly traded specialist Investment Company dedicated to investing in rare and high quality coins.These started off at 14.50p a share back on 24/05/2006. The price has been on the way down ever since! I will keep you updated on these with regular updates on this page, so please keep coming back for the latest instalment! Theses shares are still definitely worth keeping an eye on, A good little stock to buy now and tuck away for the future! Definitely a longer term investment. (5-10 years)
Share price for Avarae Global coins ( Not in real time)
05/03/2008 Avarae Global Coins PLC (AVR) Share price (05/03/2008) 10.25p
04/06/2008 Avarae Global Coins PLC Well, price still more down then up at the moment Share price (04/06/2008) 9.88p ( Into a bit of a Bear market here in the UK at the moment)
07/07/2008 Avarae Global Coins PLC Price well down now, not a good idea to buy just yet... Share price (07/07/2008) 8.75p ( Into a Bear market here in the UK at the moment)
14/10/2008 Avarae Global Coins PLC Price down to 8p not that bad when you consider what's going on in the market at the moment. (Well into a Bear market here in the UK at the moment)
29/01/2009 Avarae Global Coins PLC Price down to 5.13p UK officially enters recession. I feel the price may still go lower.
7/05/2009 Avarae Global Coins PLC Price up to 7.00p Director share purchase last month helps to move price in right direction. UK recession not over yet, bit of a gamble to buy as yet.
11/06/2009 Avarae Global Coins PLC Price down to 6.75p
28/07/2009 Avarae Global Coins PLC Price up to 7.25p Board change
28/08/2009 Avarae Global Coins PLC Price down to 7.00p
18/12/2009 Avarae Global Coins PLC Price up to 7.88p Interim results
25/01/2010 Avarae Global Coins PLC Price unchanged 7.88p
07/02/2010 Avarae Global Coins PLC Price up to 8.25p
04/03/2010 Avarae Global Coins PLC Price unchanged 8.25p
27/04/2010 Avarae Global Coins PLC Price up 8.75p
29/05/2010 Avarae Global Coins PLC Price down to 8.13p
20/06/2010 Avarae Global Coins PLC Price unchanged 8.13p
04/08/2010 Avarae Global Coins PLC Price down to 8.00p
16/09/2010 Avarae Global Coins PLC Price up to 8.50p
09/10/2010 Avarae Global Coins PLC Price up to 8.63p
05/11/2010 Avarae Global Coins PLC Price up to 8.75p
13/02/2011 Avarae Global Coins PLC Price up to 8.88p
14/03/2011 Avarae Global Coins PLC Price unchanged 8.88p
30/05/2011 Avarae Global Coins PLC Price Down to 8.75p
10/07/2011 Avarae Global Coins PLC Price unchanged 8.75p
20/10/2011 Avarae Global Coins PLC Price up to 9.63p
22/11/2011 Avarae Global Coins PLC Price Down to 8.88p
18/05/2012 Avarae Global Coins PLC Price up to 10.63p
Happy collecting
Disclaimer
I believe that the information and advice given on this page is accurate and reliable. However No warranty of reliability is given and no responsibility arising in any other way for errors and omissions, including responsibility to any person by reason of negligence is accepted by Petercoins. All information is provided without regard to any person's individual circumstances, investment objectives, financial situation or needs The value of shares can fall as well as rise and you may not get back all of the money you invested. In some circumstances you can lose all of your money.